How do I adjust the timing on my 2001 Audi A2?

I recently purchased a used 2001 Audi A2 and I noticed that the timing seems to be off. The engine is lagging and I can hear a slight knocking noise. I have some basic knowledge of car maintenance, but I have never adjusted the timing before.

First, you will need a timing light and a wrench to loosen the distributor bolt. Bring the engine to operating temperature before beginning. Make sure to consult the owner's manual for the correct timing specifications for your specific model.